Available Benefits to PH MSMEs in light of COVID-19

Below is a summary of relevant rules, regulations, advisories and announcements issued by different regulators in the Philippines to aid Micro, Small and Medium Enterprises (“MSMEs”), as well as start-up companies, in mitigating the economic impact brought about by the Corona Virus Disease 2019 (“COVID-19”) pandemic.

1. Section 4 (aa) of Republic Act №11469 or the Bayanihan to Heal As One Act

(https://www.officialgazette.gov.ph/2020/03/24/republic-act-no-11469/)

The President of the Philippines is authorized to direct all banks, quasi-banks, lending companies and financial institutions to provide a minimum of 30-day grace period for all loans falling due within the Enhanced Community Quarantine (“ECQ”) period without incurring interests, penalties or other charges.

2. Implementing Rules of Section 4 (aa) of Republic Act №11469 or the Bayanihan to Heal As One Act

(https://www.officialgazette.gov.ph/downloads/2020/03mar/20200401-IRR-RA-11469-RRD.pdf)

This imposes banks, quasi-banks, lending companies and financial institutions to provide a 30-day grace period for all loans falling due within the ECQ period without incurring interests, penalties or other charges. The 30-day grace period is automatically extended upon extension of the ECQ period.

Financial institutions cannot charging interest on interest, fees and charges during the grace period to future payments or amortizations made by the borrowers, and cannot require its borrowers from waiving the benefits granted under these rules.

3. DTI Memorandum Circular №20–04

(https://dtiwebfiles.s3-ap-southeast-1.amazonaws.com/e-library/Laws+and+Policies/Other+Relevant+Laws/Other+Related/Memorandum+Circular_1584318600.pdf)

This directs lessors and owners of business spaces to waive the rental fees and charges of establishments that were closed as a result of the ECQ.

4. DTI Memorandum Circular №20–12

(https://dtiwebfiles.s3-ap-southeast-1.amazonaws.com/COVID19Resources/COVID-19+Advisories/040420_MC2012.pdf)

This clarifies the treatment on commercial rents to be paid by MSMEs, by stating that a 30-day moratorium on payment of commercial rental fees of MSMEs that fall due during the ECQ period. Cumulative rents falling due within the ECQ period shall be equally amortized in the next six (6) months following the end of the ECQ.

Lessors of commercial units may adopt other concessions to extend greater generosity to their MSME lessees.

5. DTI Pondo sa Pagbabago at Pag-Asenso (COVID-19 P3-ERF) Program

(https://www.dti.gov.ph/negosyo/exports/emb-news/sb-corp-opens-p1-billion-loan-for-mses-affected-by-lockdown/)

Micro and small enterprises that have been in operation prior to March 2020 and have suffered a drastic reduction in sales during the COVID-19 pandemic may borrow money from Small Business Corporation’s Enterprise Rehabilitation Financing fund in the following amounts at an interest of 0.5% per month:

Micro Enterprises

P10,000.00 to P200,000.00

Small Enterprises

Not more than P500,000.00

6. DTI Moratorium on MSME loans

(https://www.dti.gov.ph/news/sb-corporation-offers-moratorium-on-msme-loans/)

The Small Business Corporation offers MSME borrowers and their partner financial institutions situated within the areas declared under ECQ a 1-month moratorium for loan payments due on March 16 to April 14, 2020. Affected borrowers may also request to pay only the interest portion of their monthly payments for the succeeding 6 months, and to resume their regular monthly payments thereafter.

7. DOLE Department Order №209–2020 (CAMP)

(https://www.dole.gov.ph/wp-content/uploads/2020/03/a.department-order-no.-209.pdf)

MSMEs implementing flexible working arrangements or temporary suspension of work resulting in reduction of pay of its employees may avail of the Five Thousand Pesos (P5,000.00) financial assistance for under the DOLE COVID-19 Adjustment Measures Program for its employees.

8. Joint Memorandum Circular №01 Series of 2020 (DSWD Social Amelioration Program)

(https://www.officialgazette.gov.ph/downloads/2020/03mar/20200328-JOINT-MEMORANDUM-CIRCULAR-NO-1-S-2020.pdf)

Under the DSWD Social Amelioration Program, cash or non-cash subsidy in the amount of Five Thousand Pesos (P5,000.00) to Eight Thousand Pesos (P8,000.00) will be granted to each household that has at least one (1) member who is classified as, among others, micro-entrepreneur or operator of small-scale enterprise or business activity that has an asset size of less than One Hundred Thousand Pesos (P100,000.00).

Anne Marie N. Calonge is a Senior Associate at Gorriceta Africa Cauton & Saavedra and a member of its Litigation, Labor, and Real Estate Departments. She received her Bachelor of Laws degree from San Beda College — Manila. She also holds a Bachelor of Arts degree, Major in Legal Management, from the University of Santo Tomas. Anne became a member of the Philippine Bar in 2012.

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